Municipalities likewise borrow both for reproductive purposes and for
objects from which no direct revenue can be expected. They may invest
money lent them in gas or electric works or water supply or tramways,
and get an income from them which will more than pay the interest on
the money borrowed. Or they may put it into public parks and recreation
grounds or municipal buildings, or improvements in sanitation, thereby
beautifying and cleansing the town. If they do these things in such a
way as to make the town a pleasanter and healthier place to live in,
they may indirectly increase their revenue; but if they do them
extravagantly and badly, they run the risk of putting a burden on the
ratepayers that will make people shy of living within their borders.

Whatever be the object for which the loan is issued, the procedure is
the same by which the money is raised. The Government or municipality
invites subscriptions through a bank or through some great financial
house, which publishes what is called a prospectus by circular, and in
the papers, giving the terms and details of the loan. People who have
money to spare, or are able to borrow money from their bankers, and are
attracted by the terms of the loan, sign an application form which is
issued with the prospectus, and send a cheque for the sum, usually 5 per
cent. of the amount that they apply for, which is payable on
application. If the loan is over-subscribed, the applicants will only
receive part of the sums for which they apply. If it is not fully
subscribed, they will get all that they have asked for, and the balance
left over will be taken up in most cases by a syndicate formed by the
bank or firm that issued the loan, to "underwrite" it. Underwriting
means guaranteeing the success of a loan, and those who do so receive a
commission of anything from 1 to 3 per cent.; if the loan is popular and
goes well the underwriters take their commission and are quit; if the
loan is what the City genially describes as a "frost," the underwriters